How would you feel if companies like Walmart or Amazon knew if you had a cold, or how extroverted you are? The truth is, they likely already know these things about you, and no, it’s not because they put cameras in your house.
Retail giants have been collecting data such as addresses and purchase history and using the power of AI to understand their customers in extraordinary detail for several years now. In fact, AI-driven software has found its way into several aspects of retail, and its usage is expected to become more widespread in the future. Here are three ways AI-powered software is revolutionizing the retail industry.
Customer Service
We’ll start with an area directly related to why Amazon might know so much about you: customer service. The data being collected about you hasn’t changed much in recent years, but thanks to AI, much more information can be extrapolated from this data. AI can detect patterns and relationships in consumer data such as past purchases to conclude things about customers humans could never have dreamed of. These analyses about customer behavior provided by AI have proven extremely useful in enhancing customer service in multiple ways.
The first way revolves around personalization. Naturally, by understanding more about customers, retailers can use this knowledge to provide customers with a shopping experience that is tailored to their personal wants and needs. North Face, for example, utilizes an AI bot to help customers find the products they are looking for online with speed and ease, eliminating the often time-consuming task of searching through the websites entire catalog.
The most well known instance of AI enhancing customer service in retail can be found on Amazon’s website. If you ever felt like their recommended products section seems to read your mind, you can thank AI-driven software for that. Amazon uses artificial intelligence to collect and analyze a massive amount of consumer purchase data along with your own search history and purchase history to come up with the products you are looking for, or products you may like that you were not aware of.
Supply Chain Planning and Pricing
Because artificial intelligence can predict consumer behavior so well, this information can be used by retailers to help fine-tune other aspects of their business. Understanding customer behavior also means having a good idea of future sales. Predictions and forecasts provided by AI can re-shape how retail is done behind the scenes.
Inventory management is an aspect of retail in dire need of AI-powered software. Traditionally speaking, supply chain management revolves around the educated guesses experienced professionals. Of course, this means that errors often occur, resulting in buying too much of a product at the wrong time, or running out of stock and missing out on much needed sales. Advanced algorithms can predict sales with much more accuracy than humans could ever dream of, finding potential flaws within the supply chain and providing reliable recommendations.
Prices can also be optimized using AI-driven software. For retailers, pricing products properly is becoming increasingly difficult. Larger retailers need to reprice thousands items several times per week, or even multiple times per day. Smaller retailers struggle to compete in such a dynamic market, as they often lack the resources necessary to reprice items fast enough. For retailers of all sizes, price optimization software can prove to be a worthwhile investment, providing companies with highly accurate price management and allowing them to reprice items in a timely manner.
In-store
The benefits of AI are not exclusive to e-commerce, either. Many brick and mortar retailers are using valuable customer data collected and analyzed by AI-powered software to give themselves a competitive edge. AI can enhance other high-tech solutions utilized by in-store locations, such as beacons, to help understand what brings customers in and provide customers with personalized notifications. For example, having a membership and getting exclusive offers can be taken a step further with AI, giving personalized offers for family member’s birthday that may be coming up based on the data it has connected with your account.
This amount of personalization in-store has given retailers a chance to create a unique atmosphere in their stores that cannot be obtained online. The possibilities for brick-and-mortar retailers using AI are endless; in the future we may even see billboards that change advertisements via facial recognition (e.g. changing ads according to the gender of the observing shopper), a feature that is already being tested in isolated circumstances.
Conclusion
AI is everywhere in retail, and it is not going away any time soon. Though many conversations can be had about the extent that AI-driven software should be used by retailers and what information they should collect about customers, the fact of the matter is that AI can be used to optimize countless aspects of retail. Though many often fear the mysterious ways in which AI works, one thing is clear: with AI-powered software, retail is being reborn.